By the time I was 24, I was doing a job that I totally loved. As a fresh graduate, I couldn’t ask for more. However, as time passed, I realized that doing a job for the rest of my life wasn’t my cup of tea. It’s because the nature of the job was repetitive and I didn’t want to go to an office till I reached retirement age.
Luckily, a friend of mine was doing forex trading at that time. Fascinated by this idea, I saw huge potential in it and thought that my life would be a walk in the park if somehow, I figured out how it worked.
So, along with my job that I was planning to quit soon, I studied the forex market fundamentals. As soon as I felt confident, I put up all my savings of $5000 in the market with some really frayed nerves and lost everything within 2 months.
It was my first, somber mistake: to put up everything in the market without any backup plan. Well, that wasn’t my only mistake and if you want to find out more, then read on:
Know Everything About The Indicators You’re Using
When dealing with forex trade, it’s possible to read charts without using any indicator. However, it’s also quite risky, since traders know that the markets can take a steep turn anytime.
This is why I relied on indicators too, which wasn’t a bad thing at all. The real mistake was that I solely depended on two indicators; order blocks and fair-value gap (FVG).
Order blocks are areas where large buy or sell orders were placed by big market players in the past. These areas help us determine the support and resistance levels. On the other hand, FVG is somewhat easier to understand; it shows the disparity between buyers and sellers of a currency pair.
As I was too consumed with these two indicators, I forgot to add the relative-strength index (RSI), which tells us if a pair is overbought or oversold. Most times, I would take a buy trade without even looking at RSI. As a result, my account just dipped every time and I was left wondering where I went wrong.
So, if you’re using indicators, learn everything about them. Know which other indicator would work the best with your situation and only then, enter the market.
Internet Connectivity
It’s not that I didn’t know the forex market could change its direction at any given time, I was just not prepared for it.
A few major losses that occurred to me were due to my own negligence. The mistake that made me feel like a dud was that I didn’t have a reliable internet 0to execute my trades. Let me tell you why that should be your top priority:
A sluggish internet may lag when it comes to opening or closing a trade. In those few seconds, the market can move anywhere and you miss out on the perfect entry. My previous internet connection wasn’t that reliable and I missed out on many trading chances. Secondly, when you go outside, a random public Wi-Fi isn’t the most reliable option.
To deal with this, a quality internet connection can reap great benefits. I ditched my previous and not-so-reliable internet for Xfinity, specifically for two reasons:
Firstly, Xfinity provides millions of free hotspot zones around the country. So, even when I’m outside, I don’t have to worry about a random internet connection, I can just connect to Xfinity through my account. Secondly, even if there’s a problem, I just have to call on Xfinity customer service phone number to get my query resolved in no time.
So, don’t compromise on a top-notch internet connection unless you want to experience what I did.
Stop Loss, Greed, and Trading Psychology
Although I was planning to discuss them separately, it’ll make more sense if I relate them.
I didn’t like the concept of stop loss (SL); the point where a trade automatically closes to limit the loss, until I lost my savings and had to start again from scratch. I always wondered why anyone would close their trade whenever they experienced a loss. It was the greed and lack of trading psychology that didn’t let me put SL on my trades.
I could’ve saved a few hundred bucks on some trades, only if I had a SL. But as I was greedy and didn’t have a clue about trading psychology, I just saw my trades going down and just blindly hoped that they might bounce back. As a result, I had to close my trades with heavy losses at a point when there was no hope of recovery.
Now when I am working as a full-time forex trader, the first thing I do whenever I make an entry is to put an SL. Moreover, I do extend my SL sometimes, only if I’m dead sure that the market will bounce back. Otherwise, I don’t extend SL because losses are part and parcel of trading. Plus, I keep my greed at bay and don’t do revenge trading whenever I face losses.
To sum up, the mistakes I made weren’t unique. I could’ve protected my life’s savings if I had known about these errors. Nonetheless, if you’re aspiring to be a successful trader, keep these mistakes in mind because, trust me, once you lose everything in this market, getting up again would need a lot of determination and motivation. Good Luck.
